Canada, Y2K and international trade

I found this article at Sanger's Review of Y2K News Reports. We all know that international trade could be disrupted by Y2K. There was an additional complication mentioned in this article I had not read about before...letters of credit.

Another wrinkle in the import-export issue is the reliability of international financial systems.

Many importers and exporters deal with letters of credit for their payments. Transactions are performed electronically between banks in Canada and those overseas on behalf of the buyer and seller, who provide documentation to prove theyve sent and received the goods.

Larry Hahn, director of regulatory affairs for Livingstone International, the biggest customs brokerage in Canada, said the big fear now is that foreign banking systems arent stable enough to ensure the letters of credit will move smoothly.

He said hes received indications from the banking sector that it might not be willing to handle letters of credit with certain countries as the new millennium nears.

"That has a major impact on people selling their goods, and being assured that theyre going to be compensated for that sale," said Hahn.

"Reports have been coming out of Japan that its had problems with
its shipping industry already. One ships engine completely stopped
on Jan. 1, and Hong Kongs shipping system went off-line in February."

Industry Canada Testimony
http://www.ampsc.com/~imager/Testimony/75b-e.html
Alliance of Manufacturers and
Exporters
STANDING COMMITTEE ON
INDUSTRY
COMITI PERMANENT DE
L'INDUSTRIE
EVIDENCE
[Recorded by Electronic Apparatus]
Thursday, November 26, 1998
Mr. Jayson Myers (Senior Vice-President
and Chief Economist, Alliance of
Manufacturers and Exporters Canada):
Snip
One point I'd like to make is that information
technology today pervades almost every aspect of
manufacturing and exporting businesses. We're
looking not only at information systems, computer
systems used for the communication and storage of
information, but also at embedded systems where
information technologies are becoming more and
more important in design systems in communicating
between computer systems and machinery on the
shop floor and automated equipment being used in
manufacturing and processing establishments.
Snip
The problem of Y2K really touches every aspect of
manufacturing business, and this problem is not
simply contained within Canada itself. Manufacturers
today export 65% of their total production outside of
the country, with 55% of the total production being
exported into or through the United States. They're
also purchasing 60% of all the goods and services
they use in production from sources outside of
Canada, again largely from the United States,
although that's not always the case. Imports are also
coming in from Europe, Asia and Latin America.
So from our point of view, we will not be able to
manage this problem if we simply look at it from a
Canadian perspective. It is an international problem,
and that certainly presents a lot of challenges to the
manufacturing and exporting community in Canada.
Snip
Only 36% of companies surveyed said they had plans
in place to upgrade or replace embedded systems on
the shop floor. Only 48% of respondents said they
had completed an assessment of supplier or customer
capabilities, and only 34% had completed a risk
management plan to deal with potential problems
following the change in the millennium. A fewer
number had any plan in place to deal with potential
liabilities arising from a Y2K problem.
Snip
First, there's still a wide range and a considerable
amount of disinterest in this problem. The end of the
millennium is coming. I don't know how many days
are left, but there is still quite a bit of disinterest that
this is going to be a serious problem. That's certainly
something that provides a communication challenge
not only to our association, but also to government.
Snip
Mr. Eughne Bellemare: It's in huge printing
shops. We have printing equipment that's made in
Germany, France, and England, and we have
machinery that creates plates and stuff so that we in
turn can produce. They sometimes have robotics, and
robotics have embedded chips. How pervasive is this
in our manufacturers in Canada?
Mr. Jayson Myers: Extremely.
Mr. Eughne Bellemare: How do we correct that?
How is it being corrected?
Mr. Jayson Myers: That gets to some of the
difficulties. I think the larger companies are taking
measuresnot all of them, of course, but the degree
of automation pervades almost every aspect of
manufacturing now.
1050
Snip
Ms. Francine Lalonde: For that, they would need
to know that all the embedded chips in their system
might fail. How can they be convinced? This spring,
I sent a letter to all companies in my riding. I finished
by saying that being ready would be the best way that
they could become market leaders. They told me that
they were pleased that I had done that, and that they
were not alarmed. However, when it comes to
embedded systems, the managers may not be fully
aware of the situation. How can we make this
credible?
[English]
Mr. Jayson Myers: There again, I think it may be
in dealing with many of these matters and how
technology is being integrated.
1055
We've been focusing on the problem of the embedded
systems on the shop floor, on the use of computer
technology and the growing importance of
technology. I think the other problem here is that we
also have to recognize that companies are extremely
dependent on supply chains, on transportation
systems, on communications systems, on energy
systems, and everything else to make sure they
remain in business. All of that has to be there. Again,
I think to focus on the infrastructure is extremely
important.
End Post......

Year 2000 Preparation Archive

Year 2000 Preparation Archive. Choose the category you are
interested
in and press Submit. The link will appear in a new page. The Password
is y2k